TOKYO (Reuters)
— Japanese display maker
Sharp Corp expects its operating profit to fall this year as the
benefits of a weaker yen recede, taking some of the shine off its
recent return to profit following a painful restructuring.

Asian rivals are keeping up competitive pressure in flat-panel TVs
and TV screens, but Sharp said it expected to end this year in the
black thanks to the prolonged turnaround drive and strong demand
from Chinese smartphone makers.

Shares in the supplier of screens for Apple Inc's iPhone have fallen
22 percent this year, compared with a 13 percent drop in Tokyo's
benchmark Nikkei average.

The company acknowledged it still had far to go to turn around its
fortunes, after racking up more than $9 billion in combined losses
over two years before climbing back into the black for the year just
ended on March 31.

"We are still resetting and starting from zero," said President Kozo
Takahashi. "I think we still need to make a company structure that
can withstand changes in the market and the environment."

Sharp projected an operating profit of 100 billion yen this year, in
line with the 98.7 billion yen average forecast of 15 analysts
according to Thomson Reuters I/B/E/S but down 8 percent from the
prior year.

Net profit was seen rising to 30 billion yen from last year's 11.6
billion yen, as it shed last year's heavy burden of restructuring
costs.

Its equity ratio, a closely watched indicator of its financial
health, shrank markedly in the January-to-March quarter from the
prior three months as it provided for retirement obligations, but a
senior executive said its profit situation was sound enough that it
would not have to tap wary markets for more funds.

"The drop in our equity ratio below 10 percent at the end of the
(2013-14 financial) year was within expectations," said
representative director in charge of finance Tetsuo Onishi at an
earnings briefing.

The company's equity ratio was at 8.9 percent on March 31, down from
13.9 percent at the end of December and below the 20 percent
considered healthy.

"We will raise the equity ratio through retained earnings. We have
no plans regarding equity," said Onishi.

A Japanese media report last month that Japan's largest display
maker would tap the equity markets to raise 200 billion yen and
bolster its balance sheet sent its shares tumbling to their lowest
in more than a year.

The company's solar cell business is expected to shrink 33.9 percent
this fiscal year, dragging the segment to a 5 billion yen operating
loss.

By contrast, Sharp forecast profit from its LCD panels would rise 32
percent this year to 55 billion yen ($540.75 million) as it boosts
the proportion of its production capacity devoted to making
higher-margin smartphone screens, away from more commoditized TV
screens.

The company fell short of its target to boost the share of
small-screen output at its Kameyama 2 factory to 39 percent in the
January-March quarter, reaching only 28 percent, but Takahashi was
confident it could still reach at 50 percent target within the six
months to September 30.

"Looking at orders, we should be at 35 percent for May and so I
think we can make it to 50 percent for the first half," he told
reporters after the earnings briefing.

He added that Sharp would cope with falling smartphone panel prices
by cutting costs and improving automation technology.